You probably know how many cars are on your lot right now (or at least a good idea, we hope). Your accounting manager tracks payroll down to the minute. And you use smart data to gain insights into profitability from dashboards and reports. But, you still have a problem—a people problem. With an average dealership turnover rate of 46% for employees and 80% for salespeople, the industry needs to get better at tracking employee statistics.
Calculating the True Cost of Turnover
Your managers know turnover hurts. The best way to combat this key issue and win back the losses to your budget is to formulate a smart strategy. Calculating the true cost of employee turnover requires measuring more than just lost wages. Here are several key metrics to monitor:
- Unemployment Compensation and Exit Interview Fees – If your dealership expects to spend money paying furlough fees, unemployment, and other costs, these should be included in your metrics.
- Replacement Costs to Advertise Open Positions – Pre-employment screening and money lost during downtown are often hard to estimate. Yet, dealers have reported spending up to $10,000 on resources like advertising, interviewing, and recruitment.
- Training New Labor – Your dealership may require service technicians to obtain costly certifications setting you back thousands of dollars like the ones offered by the National Institute for Automotive Service Excellence.
- The Productivity Gap – It may feel impossible to measure a loss to your team’s productivity or morale. However, studies show employees reach full productivity after three years on the job.
It’s Not All Doom And Gloom
Your dealership has already been through a lot this past year. With rapid adoption of digital tools, shifting buyer habits, and an uncertain economic market, you’ve made fast-changes to keep up. Change is a constant in your line of work. And, almost any issue is solvable—as long as you measure it.
93% of employees polled believe their workplace would be better if the had access to better technology.
Here are the often overlooked statistics you should be tracking:
- Employee Satisfaction and Happiness – A happy team works harder and sticks around longer. Measuring employee satisfaction is the first thing you and your managers should monitor to improve retention. Hindsight is 2020, but catching a problem before it occurs is even better!
- Voluntary Turnover Rate – Tracking how often your staff leaves for greener pastures over time will give you a benchmark to help establish a normal level of tenure at your dealership. It can also signal a problem (if this number suddenly jumps) that something isn’t going well.
- Involuntary Turnover Rate – Layoffs are extremely unfortunate. Your hiring brand suffers over time, and you could earn a reputation as a poor employer. Tracking this metric could indicate an HR issue, like a mismatch between skills and job description.
- Retention Rate by Department and Manager – There’s a saying that people don’t leave bad jobs, they leave bad managers. You may want to invest in manager training and development if you’re seeing this metric spike.
- Training Expenses per Employee – Could the wrong technology be impacting your turnover? 93% of employees polled believe their workplace would be better if the had access to better technology.
When you measure what matters, you arm yourself with the data to battle the problem. Your dealership can reduce turnover over time. This industry-wide issue has proven resilient over time. But, so has your dealership. Discover new research and key insights in the guide, 9 Ways to Reduce Turnover and Improve Retention: A Dealer Principal’s Guide to Hiring and Retaining Talent.